HW-1667 Finance Solutions Discussion

HW-1667 Finance Solutions Discussion
1) ABC, Inc. has 6 percent bonds outstanding that mature in 20 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $814 each. What is the firm’s after-tax cost of debt if the tax rate is 27%?
2) Suppose the nominal rate is 21.9% and the inflation rate is 5.3%. Solve for the real rate. Use the Fisher Equation to get your anser.
3) The common stock of ABC Industries is valued at $26.7 a share. The company increases their dividend by 7.4 percent annually and expects their next dividend to be $2.56. What is the required rate of return on this stock?
5) The beta of the risk-free asset is: a)0 b)1 c)1.5 d)2
4) You have observed the following returns on ABC’s stocks over the last six years:
19.2%, 3.2%, 13.6%, -4.6%, 14.2%, -2.9%
What is the geometric average returns on the stock over this six-year period.
6) The spot rate for the pound is £0.6673 = $1 and the spot rate for the Canadian dollar is C$1.2369 = $1. What is the £/C$ cross rate? Enter your answer rounded off to FOUR decimal points.
7) One year ago, you puchased 67 shares of ABC stock for $23.3 per share. During the year, you received a dividend of $2.5 per share. Today, you sold all your shares for $27.1. What are the percentage return on your investment?
9) Suppose that today’s stock price is $31. If the required rate on equity is 16.6% and the growth rate is 4.2%, compute the expected dividend (i.e. compute D1)
8) If the market value of debt is $81,289, market value of preferred stock is $91,072, and market value of common equity is 157,134, what is the weight of preferred stock?
10) You want to create a portfolio as risky as the market. Suppose you invest your money in Stocks A, B, C, and the risk-free asset. What is the weight of Stock C in your portfolio?
Stock Weights(%) Beta
A 22 1.2
B 28 0.6
C ? 1.3
Rf ? ?
12) The ABC Company has a cost of equity of 17.1 percent, a pre-tax cost of debt of 6.3 percent, and a tax rate of 26 percent. What is the firm’s weighted average cost of capital if the weight of debt is 36 percent?
14) The ABC Co. has $1,000 face value stock outstanding with a market price of $870.2. The stock pays interest annually, matures in 10 years, and has a yield to maturity of 11.3 percent. What is the annual coupon amount?
15) A stock just paid a dividend of D0 = $2.3. The required rate of return is rs = 15.1%, and the constant growth rate is g = 3.5%. What is the current stock price?
17) ABC Company’s last dividend was $3. The dividend growth rate is expected to be constant at 8% for 3 years, after which dividends are expected to grow at a rate of 3% forever. The firm’s required return (rs) is 13%. What is its current stock price (i.e. solve for Po)?
27) You are planning a trip to London and plan on spending 15,056 pounds. How many dollars will this trip cost you in dollars if one U.S. dollar is worth 0.5916 pounds
24) ABC company’s market value of common stock is $200 million, preferred stock is $300 million, and debt is $500 million. Suppose that the cost of equity is 7%, the before-tax cost of debt is 3.4%, cost of preferred stock is 6%, and the tax rate is 25%.
22) A bond that sells for less than face value is called as:
a)discount bond b)debenture c) perpetuity d)par value bond d)premium bond
21) The risk-free rate is 6%, the market risk premium is 10.5%, and the stock’s beta is 1.3. What is the cost of common stock?

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 30% with the discount code ESSAY